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GNC touts Amazon and revival successes

GNC continues to roll out its One New GNC effort to reverse disappointing earnings reports. Among second-quarter earnings positives: Amazon and transaction count. Disappointments: Sales.

Despite positive transaction growth, GNC store sales continued to fall in the second quarter.

The supplement chain reported 12.3 percent more transactions as it continues what it calls its One New GNC improvement project. The sales slide slowed, yet same-store sales decreased 0.9 percent in GNC’s domestic company-owned stores (including gnc.com) while domestic franchise locations experienced a 1.1 percent decline.

Interim CEO Bob Moran touted this as good news during the July 27 second-quarter 2017 earnings call.

“In many ways, this business is bucking the retail trend with transaction growth that is well above the APG retail index year to date,” he said. “The challenges in our sector are well publicized as are concerns about the future of retail. But we believe there is an opportunity for business models like GNC that listen and respond to the customer and give them products and experiences they can’t get anywhere else.”

Even as GNC strives to differentiate, online sales and Amazon are key to its strategy. The supplement retailer opened an Amazon store earlier this year to feature its “best” products and has committed to pricing that remains consistent with retail locations.  

Franchisees benefit from revenue sharing and new customers, which GNC leadership says find the brand online and then become a bricks-and-mortar buyer.

“Because more than 50 percent of online product searches happen on Amazon, and of those more than 37 percent buy that product in a store, we believe Amazon is not a death knell for brick and mortar, but a great advertising platform that puts us right in the path of countless new customers,” Moran said.

Additional second-quarter GNC earnings highlights include:

  • Consolidated revenue of $641.0 million in the second quarter of 2017, compared with consolidated revenue of $673.2 million for the second quarter of 2016.
  • Net income of $15.7 million compared with $64.0 million in the prior year quarter.
  • Diluted earnings per share (“EPS”) of 23 cents for the second quarter of 2017 compared with 94 cents in the prior year quarter.

"We made good progress in the second quarter, and our investments in pricing, loyalty and improving the customer experience continued to deliver positive results," Moran said via release. "For the second quarter in a row, we saw meaningful transaction growth, improvement in our dot.com business and increased enrollment in our loyalty programs. We believe this business is headed in the right direction, and we remain focused on execution and sales growth."

Moran also announced Thursday that he signed on as interim CEO for another six months.

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